Yep, that dear dress is made from a pillowcase. I am not kidding you.
I've seen pillowcase dresses available and local craft fairs as well as available at on-line craft shops. They are a popular trend that is catching on. Dresses like the one pictured may inspire you to make your own pillowcase dress for the little babe in your life.
Additionally, you may get creative and design a matching baby bonnet to compliment the ensemble. Pillowcase dresses and matching hats are a simple outfit that has tons of appeal.